The NBA season has just started, which made me want to try to combine two of my favorite things—sports and capital markets. The NBA has 30 teams, and guess who also has 30 something? The Dow Jones. They both have tradition. While the NBA league was founded in New York in 1946, the Dow Jones had been founded 50 years before, also in New York. What’s more interesting is that they both have a relatively steady list of teams/stocks.
The NBA rarely has defunct teams. Occasionally, some teams relocate to another city, as the owner of a franchise and the NBA will reach an agreement for moving to some other city (based on a larger market or other financial reasons). The last one to relocate was the Seattle Supersonics, which became the Oklahoma City Thunder in 2008. The latest team to join the league was the Charlotte Hornets in 2004.
The Dow Jones index components also do not change that often. The Dow Jones used to be an industrial index, consisting primarily of industrial companies that were the largest part of the American economy in the twentieth century. Over time, the index has changed together with changes in the economy, e.g., more technology and more financial and pharmaceutical companies. Today, most of the companies in the index have nothing to do with old-fashioned industrial America. Yet, only a few companies changed each decade, and most of its components were in place in the last century.
30 for 30
Every company has its own character, as every NBA team has its own character. So why don’t we match them?
- The oldest company in the Dow Jones index is General Electric—the company with the most prestigious history, the company that Thomas Edison founded, and a company that while not always the greatest is always close to the top. Ladies and gentleman, here is the Boston Celtics—the team with the history and the most championships. By the way, where are the headquarters of General Electric? You guessed it.
- The second oldest company in the index is ExxonMobil, which was admitted in 1928. It reminds me mostly of the Detroit Pistons—a company with a legacy from a city with a legacy, which has had its ups and downs. Over the years, the Pistons was one of the most volatile companies, fluctuating between championship and lottery teams—similar to ExxonMobil’s revenues fluctuating based on volatile oil prices.
- Procter & Gamble—They do it all. If you think consumer goods, you think P&G, and they are solid. The company is constantly on top exactly like the San Antonio Spurs. Can’t you envision Greg Popovich as P&G CEO?
- United Technologies—United Technologies is one of the few industrial companies left in the index. It has been there for ages and is a very government-oriented company, so we have no other choice than to mix them up with the Washington Wizards.
- 3M—Another industrial company of hardworking people, just like the Indiana Pacers. They are not real fans of the new economy and the new basketball, and they seem to live on past glory.
- IBM—It seems that IBM has always been part of our life, and actually that’s true, but IBM is not the juggernaut company it used to be. Once the biggest technology company, today, it’s barely in the top 10. Sound like the Chicago Bulls?
- Merck—American Merck is a subsidiary of the German Merck, which was established in 1668. Just as the Dallas Mavericks is a subsidiary of Dirk Nowitzki, the cornerstone of the club for the past 19 years. Yes, 19. Almost as old as the German Merck.
- American Express—Who doesn’t want a black American Express card? The glory of the card inspires the entire brand, the same as the Greek Freak Giannis Antetokounmpo does to the Milwaukee Bucks.
- McDonald’s—McDonald’s definitely matches with the fattest city in America—Memphis. In fact, last year some of Memphis players looked like they are eating at halftime.
- Boeing has experienced stiff competition over the years from Airbus, its giant European competitor, whose planes are prettier at times, but the American market usually wins. This is also the story in Canada, where American-oriented Toronto and French-oriented Montreal were fighting for the glory before Toronto pulled the trigger and never looked back.
- Coca-Cola—Coca-Cola is one of the greatest brands of all time. It doesn’t matter if its revenues are decreasing. The brand and the halo are still there—just like the Los Angeles Lakers.
- Caterpillar—When you see a Caterpillar tractor, you usually don’t understand how it does what it does. Thin and elastic, yet succeeds in drilling and shoving as no one else. When I think of a player like that, I’m thinking of Kevin Garnett—a tall and super flexible weapon of mass destruction to other big men. Kevin Garnett made his glory with the Minnesota Timberwolves, and today another young star reminds me of him. His name is Karl Anthony Towns, or KAT. And what is Caterpillar’s logo? CAT.
- JP Morgan Chase—Like most financial institutions, the company is always involved in scandals. They are New Yorkers by soul, and they are the center of the world regardless of their performance. Mesdames et Messieurs, the New York Knicks.
- Walt Disney—The company of the Disney parks has to be mentioned together with Orlando, the city that hosts these parks. The Orlando Magic quite often lacks the magic, but going to their games is much cheaper than going to the parks.
- Johnson & Johnson—J&J is a company that specializes in products for babies, so they would definitely find some good customers in the Phoenix Suns, where the average age of the starting lineup barely hovers above 20.
- Walmart—Solid. No matter what happens, people will always buy food. Walmart is a team of average people just like the Utah Jazz—a team of all the John Stocktons of the world. They can be great, but they never brag about it.
- The Home Depot—The Atlanta Hawks has entered a rebuilding phase, and what place better to rebuild than Atlanta? It only makes sense that Home Depot’s headquarters are in Atlanta.
- Intel—One trick pony. The company always tries to enter new markets, but they really have only one revenue generator they can trust, which is similar to the Oklahoma City Thunder with Russel Westbrook. Will it change this year with the addition of Paul George and Carmelo Anthony? Will Intel’s position change with the acquisition of Mobileye? Only time will tell.
- Microsoft—Microsoft has made quite a shift in the last few years. A decade ago the company was very software oriented, but today most of its revenues are derived from hardware, similar in some way to the Houston Rockets. Once a team of big men, such as Hakim Olajuwon, they controlled the basket area, but today it’s mainly a team of 3-point shooters.
- Pfizer—Speaking of a one trick pony, we have the king of Viagra. They have a pipeline of many medicines, but Viagra rules them all, like LeBron James controls the Cleveland Cavaliers and the entire Eastern Conference.
- Verizon—Verizon is the only telecommunication company in the index, and as such it mostly makes me think of reception problems, which is the era of the Brooklyn Nets. No matter what they do, they are just doomed to be awful. Reception problems.
- Chevron—The successor of Standard Oil and one of the companies with the longest history in corporate America. As such, Chevron has been a trailblazer over the years in many oil initiatives worldwide, but the oil industry will ultimately lose its place to greener industries, and the West Coast, especially Portland, is the place where these industries thrive. So do the Portland Trailblazers and Chevron—a distinctive contrast.
- Cisco—Cisco was the most valuable company in the world by 2000, with more than $500 billion market capitalization. Do you know what team was very strong at that time? The Sacramento Kings. And by the way, Cisco’s headquarters are not that far away.
- Travelers—Travelers is a representative for the insurance business, a business where you pay to be insured, but when something bad happens, you need to work hard to get something out of the company. The Los Angeles Clippers was always that kind of team. You thought that this year they could do something with their potential, but you were disappointed once again.
- UnitedHealth Group—This kind of managed healthcare had to match with the company that has suffered the most injuries and bad luck over the years—Philadelphia 76ers. The company has quadrupled its value in the last decade, so we can definitely Trust the Process!
- Goldman Sachs—The Miami Heat entered the league in 1987, and since that time has been the center of rising stars, gossip, and scandals. Miami is a good place for those working hard and playing hard, like the people at Goldman Sachs.
- Nike—The coolest company in the index match with the Golden State Warriors (even though Stephen Curry is an Under Armour guy). They are obviously facing tough competition, but they still rule the market.
- Visa—Michael Jordan is the greatest player of all time, so when he wanted to acquire a club, he received all the credit in the world. As the Charlotte Hornets owner, however, Jordan has not been that successful. Will his Visa last forever?
- Apple—Apple lives in a world of its own. It is building the most luxurious headquarters, and its market cap is the world’s largest, almost reaching $1 trillion. Breathing the air of the mountains. This is how life feels in Denver, and now with Jokic, Millsap, and the others, we’ll see if the Nuggets can also reach these heights.
- Dow DuPont—The merger of Dow and DuPont created the largest chemical company in the world and became the last company to join the index in September of this year. The merger of these two giants resembles the merger of the two giants of the New Orleans Pelicans—Anthony Davis and Demarcus Cousins.
Yes, I know that some of the matches are a bit of a reach, but matching 30 stocks to 30 NBA teams is not easy, especially since most companies in the Dow Jones are extremely successful, but in the NBA, some are bad, and some are extremely bad. But at least the season has just started!